The details of the Copyright Royalty Board's decision on royalties to be paid by the Satellite Radio came pouring out today, setting up a three level royalty system that insures the death of Internet Radio.
You can read Reuter's full report here: Sirius, XM Royalties Set
But here is the bottom line. The Copyright Royalty Board (CRB) of the U.S. Library of Congress set royalties for Satellite Radio's music playing channels at 6 percent of gross revenues for 2007 and 2008, 6.5 percent for 2009, 7 percent for 2010, 7.5 percent for 2011 and 8 percent for 2012.
While that may sound high it's a tiny fraction of the rates the very same Copyright Royalty Board imposed in Internet Radio.
In fact, in the ultimate insult, the CRB specifically rejected the virtually identical proposal from the Internet Radio Broadcasters, then they turned around and presented these reasonable and livable rates to a virtual radio monopoly, the soon to merge XM and Sirius companies.
No one, least of all the CRB, can explain this outrageous action.
As an end result we have a three tier cost system for radio broadcasting. On the low end of the scale you have AM and FM radio who pay NOTHING!!! All music is gifted to AM and FM's corporate giants at no charge what-so-ever.
Then you have Satellite Radio who will pay a high, but manageable, 6 to 8 percent of revenues for the identical sound recording being gifted to AM and FM radio.
Finally you have Internet Radio who must pay rates often in excess of 100% of revenues for the same recordings.
Advertisers and subscribers support all three formats of radio at virtually identical revenue rates, which is, of course, logical. Major advertisers like Phillip Morris or General Motors aren't going to pay more per listener for the privilege of having their ads on Internet radio than they will pay for Satellite or conventional AM and FM radio.
Internet Radio, straddled by the competition of AM and FM and Satellite Radio, cannot arbitrarily raise its ad rates. They'll get what the market will get. And AM and FM radio, with no sound recording royalties to pay at all, can artificially keep ad rates low.
Meanwhile Internet Radio cannot pay the royalties awarded by the CRB in one of the most discriminatory rulings in history. There simply is no excuse for an agency of the U.S. Government to willfully and purposely drive an entire industry out of business in favor of it's competitors.
Will Congress finally act, as it has long threatened? We do urge you to continue to write your Congress member and keep him or her informed.